Bank of America publishes stronger than expected earnings report for the second quarter

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in his free… read more.
on Jul 16, 2020
  • Bank of America publishes stronger than expected earnings report for the second quarter.
  • The bank attributes the decline in net income to £3.19 billion of loan loss provisions.
  • The financial services firm reports a 28% increase in trading revenue in the fiscal Q2.

Bank of America Corp (NYSE: BAC) published its quarterly financial results on Thursday that topped analysts’ estimates for earnings and revenue in the fiscal second quarter. The company attributed its hawkish performance to stronger than expected revenue from investment banking and bond trading. Bank of America’s results came in a day after BNY Mellon reported a 2% increase in revenue in Q2.

Shares of the company were reported 2% down in premarket trading on Thursday. At £19.68 per share, Bank of America is currently about 30% down year to date in the stock market after recovering from an even lower £14.43 per share in March. Learn more about how to invest in the stock market.

Bank of America’s Q2 financial results versus analysts’ estimates

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

According to Refinitiv, experts had forecast the company to print £17.55 billion in revenue in the second quarter. Their estimate for earnings per share (EPS) was capped at 21.54 pence. In its report on Thursday, Bank of America topped both estimates posting a higher £17.95 billion in revenue and 29.52 pence of earnings per share.

At £2.79 billion, the bank’s net income in the second quarter came in significantly lower than £5.82 billion in the same quarter last year. The company attributed the decline to £3.19 billion of provisions to cover for loan losses ascribed to the Coronavirus pandemic. On a year over year basis, Bank of America saw an about 2.5% decline in Q2. Bank of America closed its branches in Southwest Florida earlier this week over virus concerns.

The American financial services company also highlighted on Thursday that lower interest rates pushed its net interest income down to £8.62 billion in the recent quarter that represents an 11% decline versus the year-ago figure. Non-interest income, on the other hand, registered a 5% annualised increase in Q2 to £9.18 billion on the back of resilience in capital markets.

Other prominent figures in Bank of America’s earnings report

Other prominent figures in the Bank of America’s earnings report on Thursday include a 28% increase in its trading revenue to £3.35 billion as revenue from FICC (fixed income, currencies, and commodities) jumped by 50% while equities revenue came in 7% stronger in the recent quarter.

In terms of investment banking fees, the bank said that it recorded a historically high £1.76 billion in Q2 that marks a 57% increase versus the comparable quarter of last year. It also topped the experts’ forecast of £1.67 billion.

At the time of writing, the Charlotte-based multinational investment bank has a market capitalisation of £880 million and a price to earnings ratio of 10.04.

Invest in crypto, stocks, ETFs & more in minutes with our preferred broker, eToro
67% of retail CFD accounts lose money